Regional LNG: NZ to explore LNG potential

New Zealands's leading energy companies Contact Energy Ltd and Genesis Power Limited announced on Thursday the formation of an alliance to explore the development of a liquified natural gas (LNG) receiving facility in New Zealand.

Contact Chief Executive Steve Barrett and Genesis Chief Executive Murray Jackson said the joint action was a logical approach to solving a potential shortfall in New Zealand?s energy supplies towards the end of this decade.

?New Zealand faces the prospect of a primary energy ?gap? from around 2008-2010 due to the wind down of the Maui gas field, with only small new gas fields being developed, and continued demand growth.

?Offsetting these influences, we expect to see continued growth in renewable sources of energy such as wind and geothermal, and continued exploration for new gas fields. However, it is far from clear that these sources alone will be enough to fill the gap.

?To fill any remaining energy deficit, New Zealand faces two choices: coal or liquified natural gas. Each of these options poses major challenges in terms of large financial commitment and long lead times. Both are viable from a technical perspective, but we believe that LNG is likely to be the preferred option based on present policy settings,? said Jackson and Barrett.

?As the two largest gas customers in our own right, Genesis and Contact are the logical parties to be progressing an LNG development. Between us, we also account for 95 percent of the gas used in electricity generation and supplied to retail and industrial customers.?

Jackson and Barrett said the two companies have a common interest in ensuring that the country?s future generation needs are met in the most cost-effective and responsible way possible.

?That is why we are formalising an arrangement between our two companies to jointly examine LNG supply sources, and the feasibility of using LNG to run thermal power stations in New Zealand.

?Contact and Genesis will be conducting a full feasibility study of LNG as an alternative fuel source for New Zealand including alternative supplies, on-shore facilities and access to existing infrastructure.

?We expect to have formed a clear view by the end of the first quarter of next year.? (*)